No one will deny that if prices are sufficiently low, buyers will always
be found, no matter what are supposed to be the business conditions. That is one of the elemental facts of business. Sometimes raw materials will not move, no matter how low the price. We have seen something of that during the last year, but that is because the manufacturers and the distributors were trying to dispose of high-cost stocks before making new engagements. The markets were stagnant, but not "saturated" with goods. What is called a "saturated" market is only one in which the prices are above the purchasing power.
Unduly high prices are always a sign of unsound business, because they
are always due to some abnormal condition. A healthy patient has a
normal temperature; a healthy market has normal prices. High prices come
about commonly by reason of speculation following the report of a
shortage. Although there is never a shortage in everything, a shortage
in just a few important commodities, or even in one, serves to start
speculation. Or again, goods may not be short at all. An inflation of
currency or credit will cause a quick bulge in apparent buying power and
the consequent opportunity to speculate. There may be a combination of
actual shortages and a currency inflation--as frequently happens during
war. But in any condition of unduly high prices, no matter what the real
cause, the people pay the high prices because they think there is going
to be a shortage. They may buy bread ahead of their own needs, so as not
to be left later in the lurch, or they may buy in the hope of reselling
at a profit. When there was talk of a sugar shortage, housewives who had
never in their lives bought more than ten pounds of sugar at once tried
to get stocks of one hundred or two hundred pounds, and while they were
doing this, speculators were buying sugar to store in warehouses. Nearly
all our war shortages were caused by speculation or buying ahead of
need.
No matter how short the supply of an article is supposed to be, no
matter if the Government takes control and seizes every ounce of that
article, a man who is willing to pay the money can always get whatever
supply he is willing to pay for. No one ever knows actually how great or
how small is the national stock of any commodity. The very best figures
are not more than guesses; estimates of the world's stock of a commodity
are still wilder. We may think we know how much of a commodity is
produced on a certain day or in a certain month, but that does not tell
us how much will be produced the next day or the next month. Likewise we
do not know how much is consumed. By spending a great deal of money we
might, in the course of time, get at fairly accurate figures on how much
of a particular commodity was consumed over a period, but by the time
those figures were compiled they would be utterly useless except for
historical purposes, because in the next period the consumption might be
double or half as much. People do not stay put. That is the trouble with
all the framers of Socialistic and Communistic, and of all other plans
for the ideal regulation of society. They all presume that people will
stay put. The reactionary has the same idea. He insists that everyone
ought to stay put. Nobody does, and for that I am thankful.